Bitcoin Price Drops Nearly 5% in a Short Time
During the Asian trading session on Monday, Dec. 11, the price of Bitcoin experienced a sudden drop of almost 5%, falling from $43,800 to an intraday low of $41,780. As of now, BTC is trading around $42,300, still up 3.7% compared to last week.
Reasons Behind the Price Correction
Crypto analytics firm CryptoQuant pointed out that the stablecoin supply ratio (SSR) has reached a two-year high. This indicates that market participants are valuing Bitcoin more than stablecoins. Additionally, over 50% of the circulating supply is currently in profit, which has historically signaled a potential top for BTC. Long-term holders are also resisting selling their holdings despite bullish sentiment.
This week is also significant due to central banks announcing interest rate decisions, including the Federal Reserve. The outcome of these decisions can impact the overall market sentiment and potentially influence Bitcoin’s price.
Potential for a V-Reversal
Analyst “CrediBULL Crypto” suggests that after a period of consolidation, a V-reversal may occur. Major flushes in the market often lead to V-reversals rather than prolonged sideways movement.
Market Impact
The total cryptocurrency market capitalization has decreased by around $80 billion, or 4%, in the past few hours. However, it is still up 13% over the past month. Ethereum has also experienced a significant drop of 4.7%, while altcoins like XRP, Cardano, Polkadot, and Chainlink have seen larger losses. The exception is Avalanche (AVAX), which has gained 7.8%.
Hot Take: Bitcoin Faces Temporary Correction After Rally
The recent price correction in Bitcoin comes after a strong rally that saw the cryptocurrency’s price increase by 65% since mid-October. This dip can be seen as a temporary breather for Bitcoin, which has enjoyed eight consecutive weeks of gains. Market participants are closely watching the stablecoin supply ratio and the behavior of long-term holders to assess the potential for further price movements. Additionally, central bank decisions and overall market sentiment may impact Bitcoin’s future performance.
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